Tax Credit Proposals Proliferate

Published April 1, 2001

While the number of legislative proposals for vouchers has fallen this year, it’s not for lack of interest in school choice, as shown by the following tax credit proposals applicable to K-12 education.


U.S. Representative Tom Tancredo (R-Colorado) introduced the Children’s Education Tax Credit Act on January 30. The measure would give low-income parents a $1,500 tax credit for K-12 school expenses such as tuition, textbooks, computer software and hardware, and tutoring.

Senators Robert Torricelli (D-New Jersey) and Tim Hutchinson (R-Arkansas) introduced legislation on February 7 to let parents save for K-12 education expenses by placing up to $2,000 a year in a tax-free savings account. The proposal would expand an existing program for college expenses with an annual limit of $500. While former President Clinton twice vetoed bills to create such accounts, President Bush’s education plan includes a proposal to allow up to $5,000 annual donations to K-12 education savings accounts.

Fulfilling a campaign pledge, freshman Representative Eric Canter (R-Virginia) has introduced a bill to provide a refundable tax credit of up to $1,000 per child for K-12 educational expenses, including tuition, home-schooling, computer hardware and software, and reference books. Freshman U.S. Senator George Allen (R-Virginia), whose campaign also focused on school choice, is planning to introduce an education tax credit bill.

Congressman Ron Paul (R-Texas) has introduced a package of tax credits designed to return control over education dollars to parents and local schools. One measure (H.R. 368) would give parents a $3,000 per-child tax credit for tuition, books, computers, and tutors. Another bill (H.R. 369) would provide a $1,000 tax credit for all teachers, and a $3,000 credit for donations of cash or materials to local schools.


The House Education Committee in January killed tax credit bill H.B. 1180, a proposal from Rep. David Schulteis (R-Colorado Springs) for a refundable K-12 tuition tax credit of up to $3,000 for tuition expenses and up to $1,500 for home-schooling expenses.

New Jersey

Jersey City Mayor Bret Schundler and Morristown-based Parents for Free Choice in Education are promoting school choice proposals that would let parents take tax credits for out-of-pocket education expenses and for donations to K-12 scholarship foundations.


As part of his budget proposals, Governor Tom Ridge announced his plan to introduce a $15 million school choice tax credit program. He called for a 50 percent tax credit for businesses that donate money for the education of Pennsylvania children, whether to organizations that provide K-12 private school scholarships or for innovative public school programs.

“When a business wants to help our students, we should reward that behavior,” said Ridge. “Because it is a 50 percent credit, it is hoped the $15 million credit will leverage $30 million in private contributions to Pennsylvania students.”

Teacher union opponents disparaged the proposal, calling it “another tuition voucher scheme” with “laundered” money.


On February 23, Rep. John Swallow (R-Sandy) pulled his proposal for a $2,500 K-12 tuition tax credit from consideration this session. The Education Choice and Investment Act, H.B. 138, passed the House Education Committee 7-6 after the maximum credit was reduced to $1,500. Parents would use the credit for their own children, or it could be used to set up scholarships for low-income children.

In a recent Wirthlin Worldwide poll of Utah voters, Utahns favored a tuition tax credit by a 66-25 percent margin when asked to choose between three options for solving the state’s coming fiscal and demographic crisis: Higher taxes (preferred by 21 percent), larger class sizes (4 percent), or a $2,500 tax credit for tuition paid to private schools (66 percent).


Under the terms of a proposed school choice bill (H.B. 1961), Virginia parents would receive a tax credit of up to $2,500 annually for private school tuition and $550 per child for home-school materials. In addition, businesses and individuals would receive dollar-for-dollar tax credits up to $500 for donations to organizations that provide K-12 scholarships for children in low-income families.